Personal care market set for strong recovery in 2010

An upturn in the US consumer products industry is likely to benefit the personal care sector as 2009 draws to an end, indicating a much stronger year ahead.

Latest US GDP figures show a growth rate of 3.5 percent for the third quarter, a figure that is likely to translate into the creation of more jobs and ultimately improved consumer confidence.

The year 2009 has been make or break for many players in the industry, spelling the end of the road in the US for players such as Crabtree & Evelyn and brands such as Max Factor and Prescriptives.

However, Kline & Company industry analyst Carrie Mellage, believes that the worst could now be over for the personal care industry and that looking ahead some of the key growth areas for potential are about to get even more interesting.

Natural products growth​

One area in particular is natural products. Kline says that in 2009 growth in this category fell from 15.3 percent in 2008 to around 8 percent in 2009 – growth that is likely to rebound when and if the economy picks up again next year.

Despite the economic uncertainty, Mellage points out that the consumer’s love affair with environmentally responsible products, combining natural ingredients and eco-friendly packaging, has continued to flourish.

But whereas the growth for the naturals category has been robust worldwide, for the BRIC markets (Brazil, Russia, India and China) the growth is described as ‘spectacular’, reflecting both differing economic climates and developing consumer attitudes.

Value and private label brands​

Another key area for growth has been the development of value brands, a trend that has been underlined by the explosion of private label brands in mass market retail outlets throughout the US.

Indeed, Kline estimates that most private label categories have grown in excess of double digit figures during 2009, with the market for liquid soaps estimated to have grown by as much as 30 percent.

The growth of private labels comes in stark contrast to that for other leading brands within the sector, which were reported to have ‘barely treaded water or even lost steam’.

A leaner and more efficient industry​

What is emerging from 2009 is an industry that is leaner and probably more efficient, a factor that should give way to the implementation of further innovation in 2010.

Mellage notes that after the last big recession in 1990 – 91, it took about five years for industries to recover and with the personal care category it was product innovation that helped get things back on track.

History is likely to repeat itself in the coming years, but Mellage points out that for many companies that have cut back on expenditure on research and development during the last year, this decision may come back to haunt them.

Tapping into social media​

On top of driving innovation, another key area is likely to be tapping into the growing power of social media as a means of marketing products.

Indeed Mellage describes any company entering 2010 without a social media strategy in place as being ‘akin to entering a dark cave without a candle’.

In 2009 many of the key players and brands, including Estee Lauder, L’Oreal and Nivea, all entered this arena, developing key marketing strategies that have centered on websites such as Facebook and Twitter.

Likewise You Tube has also proved the perfect site to launch short promotional videos highlighting brands such as Gillette, Lancome and Maybelline.

Mellage also tips the development of global marketing strategies that focus on developing markets as another means to tapping into the better prospects that lie ahead for 2010.